Supplier Selection as a Part of Reactive Obsolescence Management

08 Oct 2012
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The importance of a vital mix of the semiconductor supplier chain is evident. One good way to get the right parts in time and in the designated quality is to have a variety between original manufacturers, franchise distributors, catalog distributors and brokers.

On the one side, original manufacturers provide a direct technical support, with almost no risk of substandard products. On the other side, the order volume has to reach a certain amount each year. Regarding the obsolescence issue, there is often no active obsolescence management offered beyond End Of Life (EOL) or Part Change Notifications (PCN) distribution. Official franchise distributors for example, offer cash back functions in addition.

Counterfeits or substandard products are equally probable, as a meteorite impact in the front yard. Franchise catalog distributors offer the advantage of broken up packaging units and minimal order quantities, for small series, development or repair issues, but there are still no strategic, proactive or reactive obsolescence management practices offered beyond last time buy options for replacement offers.Good and reliable brokers offer strategically and operationally supply chain support and the opportunity of an active obsolescence and excess management. They are not chained on manufacturer restrictions or territorial boarders. Technical support and quality issues are often taken into consideration. Also prices fluctuate daily on current market situation, sales volume and degree of desperation. However, the most prevalent concerns are counterfeit parts. There are different ways to protect the organization, e.g. through the "3 Broker Rule".

This rule underlines the necessity to choose three different reliable brokers, with as much different strong lines as possible to cover all the needs and as much similarity to overlap problems within the supply chain. Benefits you will experience are:

  • Up to three possible independent quotes
  • Good market coverage and feedback
  • A possible combination of various suppliers under one account

*Keep in mind that brokers often get better pricing due to higher purchasing volume at catalogue distributors...
.... and of course they know them all!*

Another very interesting point to discuss while working with brokers is the centralization of supply chain issues. The purchasing processes should not be handled by individuals. "Many purchasers have their own network of brokers and solve problems individually". Centralized problems could be analyzed and canalized by one specialist or a small heterogeneous team of professional purchasers. These specialists have the ability to collect and secure the growing knowledge into a secured knowledge database. As a result, every organization could be capable to secure their knowledge within their own network, even in a case of high employee fluctuation. The organization should not continuously operate in a corrective action mode and the same work should not be done over and over again.

That is one reason why purchasers often complain: „We have no time..."

The setup of a certain framework while working with brokers is essential. Within this framework the brokers could act and develop the needed service most effectively. Beyond this framework this arm of the supply chain needs qualification. Criteria like market presence, sales figures, turnover, ISO 9001, product & service portfolio etc. are no new perception. It is rather a question of whether the brokers qualify their own supply chain, like with an active living black list or a traffic light system. RED for not qualified or black listed sources, ORANGE for suppliers within a qualification process and GREEN for approved sources including risk management guidelines.

*The statement: „we test them anyway" is not satisfying for me.
In my opinion, only if you do not know where the parts come from and
in which quality they will arrive, you would need to test them*

*I prefer a supplier who is going to say in a self-confident way:
„I could let the franchise or CEM label on, if you want to see where the parts come from"*

Good reliable brokers only deal with a special worldwide network, developed over several years, with about 50 regularly used contacts. These are special OEM, CEM contacts with millions of excess stock material, special worldwide franchise distributor contacts and former franchise or semiconductor manufacturer top management people now working as independent agents.

*As an end customer it is impossible to deal with such people directly.
You wouldn't find the correct ones
and even then, they wouldn't deal directly with end customers!*

The creation of a decision matrix or bench mark will help to identify suitable suppliers which support obsolete and high risk parts in a cost effective way with the highest possible standard, quality and warranty. Following these advices could help to reduce the time of problem solving and the amount of red marked parts in your Bill of Materials (BOMs). Reducing the amount of obsolete parts, need the development and introduction of a strategic obsolescence management.

For more information on strategic obsolescence management click "here"

Last modified on Monday, 15 October 2012 14:54
Marc Brückner

Marc Brueckner is a Senior Consultant at ABSC GmbH with a Bachelor Degree in International Business and a German diploma in International Management and Controlling. He has been working in a variety of civil and military obsolescence projects and developed best practices methods for a worldwide customer base. He successfully managed difficult military obsolescence issues e.g. for the Typhoon Eurofighter, NH90, CH53, Panavia Tornado, C-160 Transall and EADS Cobra system and various other military applications. In addition, he was supporting several civil Dornier Aircrafts projects with special spare part solutions, redesign and retrofit concepts.

As an innovative full service system integrator in the fields of engineering services and IT services ABSC GmbH supports many international companies along their development and operation of business processes with complete solutions since over 20 years. ABSC creates customized and innovative obsolescence management concepts and provides competent, reliable and sustainable optimization of processes, projects and infrastructure. ABSC supports businesses as long-term partner for the definition and implementation of customer specific complete obsolescence management solutions and round off their range of services with specific seminars and events.


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